Today I’m going to talk about “home sharing” and the announced settlement between AirBnB, HomeAway, and other home sharing platforms in their suit against the City of San Francisco that requires short term rental hosts to register with the City.

The Board of Supervisors passed a law in June, 2016 establishing a City agency, The Office of Short-Term Rentals (https://shorttermrentals.sfgov.org/), responsible for policing and registering short-term rental units and hosts. The home sharing platforms, of which AirBnB is by far the largest, sued the City saying that these requirements were illegal. They claimed that they were simply a platform and that they weren’t responsible for determining whether the listings themselves were legal. This argument is similar to claims that sites like Craig’s List are protected against being held responsible for users offering illegal items or services on the Craig’s List platform. The City also asked the home sharing platforms to provide lists of their customers to the Office of Short-Term Rentals so that the City could cross check the registration of these hosts and make sure that they were abiding by the law, paying their taxes, and providing safe and habitable short-term accommodations. AirBnB said this was a violation of the Communications Decency Act and their users’ privacy. The settlement results in AirBnB taking an active role to make sure that the listings are legal and in accordance with the City’s regulations.

Up until a few years ago anyone was free to list their home, in whole or in part, on a home sharing website with no limits. This led to landlords removing Rent Controlled housing from the stock of available housing by renting it on a short-term basis to travelers instead of renting it for a minimum of 30 days at a time to local residents. This is a problem for several reasons:

Reduction of long-term housing stock - exacerbates the housing crisis

Violation of zoning laws - neighborhoods are not allowed to be used for tourist accommodations

Buildings not designed for tourist use - no security, no on-site management, not designed for this kind of use

Tenants have also been getting into the act, turning their long-term Rent-Control-protected apartments into short-term rentals and making an unfair profit based on their below-market rent.

Both of these arrangements is unfair and the City’s efforts are aimed at eliminating the unfair uses of “home sharing” and allowing some use. For example, hosted rentals where a homeowner or tenant rents a bedroom or a part of their home to an out of town guest but the resident remains in the home are allowed on an unlimited basis. For homeowners or tenants who want to rent their WHOLE home for a limited period of time, up to 90 days in a calendar year, ostensibly to offset the cost of having the home empty for an extended period of time when they’re on vacation or otherwise away, is also a somewhat allowable use. All of these uses are limited in the legislation.

The Planning Code requires a minimum of 30 day term for all residential properties. In order to be allowed to be rented for a shorter period the property must be considered a hotel.

This settlement has been a long time coming.

Share story of friend with home near USF. She and her husband live in the downstairs flat that is connected to an additional bedroom and bathroom suite on the ground level behind the garage. The main floor is a three-bedroom one-bath flat and there’s another tenant on the top floor who has been there for 35 years and pays $1,000 per month in rent. The friend and her husband have owned the property for seven years and have good equity in the building. They rented their full-floor area, including the kitchen for their home, to visitors on AirBnB as a hosted listing for many years and made money with it. When the City introduced the registration requirement she did the responsible thing and tried to get registered. They required a home inspection and mandated that she undergo a host of upgrades to make the house safer. Then when she tried to finish the construction, including a seismic retrofit, she lost her job and then they ran out of money and couldn’t complete the work. When she tried to list the house again she was refused her permit because she hadn’t finished the work and now she was without a way of finishing the work.

This is interesting to me because it shows that the City really is serious about policing this activity and preventing people from illegally listing on AirBnB. This is a pretty innovative idea: rent MOST of your home, not all of it, and make serious money. These kinds of hosted rentals are really exactly what the whole concept is about and does well: making a part of people’s homes available for a novel use that’s distinctly different from a hotel. In this circumstance the owner was offering a three bedroom unit that was attractive to families visiting from elsewhere. You can’t really rent a three-bedroom on a short-term basis and because she was sharing the kitchen with the visitors they weren’t getting the whole house. The argument against this use is that if she were to rent the entire unit, four bedrooms, two bathrooms, on the free market then FOUR OR FIVE residents, probably students at USF would have access to the housing on a regular basis. Figure that she might have been getting $1,000 per night on the weekends and she could get $12,000 to $15,000 per month on a short-term basis and continue to live there as compared with $8,000-9,000 for the whole unit on a one-year lease. Add to that the downside of Rent Control and you can understand why people do this.